Businessmen are taking a closer look across the Causeway now that Prime Minister Lee Hsien Loong and his Malaysian counterpart, Datuk Seri Najib Razak, have resolved to beef up bilateral ties.

Singapore bosses operating in Malaysia say they are open to expanding their presence across the border, while others would consider relocating there.

Better relations with Malaysia, they say, could open doors for them to set up shop in places such as the Iskandar Malaysia economic corridor in Johor.

For small- and medium-sized enterprises (SMEs), improved two-way ties would also pave the way for them to tap into a larger consumer market.

'This is the best news in a long time for businessmen,' said Association of Small and Medium Enterprises (Asme) president Lawrence Leow.

'When thorny issues can be resolved, investors' confidence will go up. Businesses are likely to either  speed up their investments or put in bigger investments.'

Since 2006, the total cumulative investment from the Singapore manufacturing sector in Johor has totalled about RM3 billion (S$1.2 billion). But Singapore investments in Iskandar are only 4.7 per cent of the overall total commitments, said Citigroup economist Kit Wei Zheng.

With leaders from both sides committed to better bilateral ties, closer economic cooperation between Singapore and Malaysia is also expected.

A key breakthrough in bilateral relations was the resolution of a 20-year-old dispute over land owned by Malaysian Railway (KTM) in Singapore.

Last week, an agreement was reached between the two leaders, to move the 78-year-old Tanjong Pagar railway station to Woodlands next year, freeing up prime land for development on the fringe of the financial precinct here.

While other issues remain, such as a dispute over the price of water and a ban on the sale of sand to Singapore, the door to enhanced economic cooperation has opened, said Mr Kit.

With one of the key disputes to have dogged ties between Singapore and Malaysia for decades out of the way, businessmen like Avi-Tech Electronics boss E. H. Lim are hoping for a smoother and safer route across the Causeway.

Mr Lim said if crime and transport conditions improve as a result of closer ties with Malaysia, he would consider relocating his operations from China to Johor.

'If Singapore and Malaysia can work in harmony, Iskandar would be a good place for us, because their culture and ours is about the same,' added Mr Lim.

'Plus it's close by, just one hour away, so it would be easier for us to manage, rather than operating out of China.'

Mr William Tay, chairman of Cast Laboratories, a company that tests materials used in building and construction, said: 'A good political relationship will help to confirm to businessmen the belief that both countries' governments are serious about supporting the economic sector.'

The firm currently has a small engineering service centre in Johor but is looking into expanding and possibly investing in a factory space, he added.

Another major development that would benefit businesses is the agreement to build a cross-border rapid transit system by 2018, said Singapore Business Federation (SBF) chief executive Teng Theng Dar.

The move 'would also be the catalyst to a more conducive and seamless business-friendly environment for companies to operate in', he said.

Mr Teng added that firms in manufacturing and manufacturing-related services, logistics as well as light and heavy engineering are showing keen interest in Iskandar, as they look for cheaper land, larger plots and lower labour costs.

There are already plans to take a 90-strong business delegation, under the SBF banner, to Iskandar in June and August this year.

Inquiries from Asme members on opportunities in Iskandar were already on the rise because of the improving economic climate, said Mr Leow. He now expects even more with the latest announcement.

'Iskandar is a very big place so they want to know what kind of industries can be put there, and if there will be any incentives,' he said. Mr Leow added that more than half a dozen health-care firms have expressed interest in Iskandar, where Malaysia's Khazanah Nasional and Temasek Holdings are jointly investing in a 'wellness township'.

Source : The Straits Times © Singapore Press Holdings Ltd. Reprinted with permission.